What did our managers say about “The Changing Consumer and Changing Sales Channels?


Yes, they are the CEOs of our country’s big and successful companies and they are very much affected by this change. So what do they think? Here are their suggestions:

In my article entitled “The Changing Consumer, Sales Channels and GOYA in Seattle,” first published on July 25, 2021, (Link) I explained the effects of Covid19 on consumer behavior and emphasized the changes in channel structures on our side where we bring our products together with our consumers. During those days, I sent this letter to my senior management friends and asked for their opinions.

My Question:

Dear Executives,

Covid19 affected where consumers buy from as society started to live home centered, turning to online shopping, then starting to learn how to combine physical + online channels, in and out of quarantine. These changes caused companies to organize in making holistic sales in omnichannel, online + physical + social media as sales channels. In almost every business category, there is no place for any company that does not adopt an omnichannel sales strategy. But omnichannel and multichannel strategies should not be confused with one another. Amazon threatened the supermarket giant Walmart, which also once changed the way Americans shop, by opening Amazon Fresh, or brick and mortar, in Los Angeles in September 2020. When I mentioned Amazon, a memory sprang to mind; in the spring of 2018, we went to Seattle with some senior executives of Yildiz Holding. We aimed to GOYA for the Godiva Cafe project, which is currently on hold due to the pandemic. If you want to learn how all the aforementioned information combines with my Seattle experience, as well as how it connects to our digital activities, then please take a look at my article and give me feedback.

They returned in a short time, and I benefited; I thank each and every one of them. I wanted to summarize their answers and share them with you. Hopefully, it benefits your business. I am not sharing the sections related to our company strategies naturally. Don’t get me wrong; this is not because I want to hide something, as what to do today is more or less clear all over the world. The important thing is to do the right thing in the right way, to take action, with perseverance and prudence.

Our Sok Market CEO Ugur Demirel comments are as follows:

As Sok Market, we think that we serve our customers in 3 different channels in our current structure. Sok, Sok Mini, CepteSok. While the e-commerce market grew rapidly with the effect of the pandemic, food and beverage online sales also showed parallel growth. We expect the food and beverage online channel to move with the market in terms of the growth rate in the upcoming period. However, we foresee that the share of online food in the total food market will not reach a significant level in the medium term. There is also profitability pressure on business models due to the current “growth-oriented competition” in the online food market. In this context, it can be thought that companies that establish a more competitive model in terms of profitability in the online food business model will show more sustainable growth. In our CepteSok business model, we aim to create a cost advantage over competitors and to provide consumers with this advantage with continuous and free delivery, and achieve sustainable growth. When we look at the Turkish market, e-commerce companies working with the Marketplace model seem to me to be essentially “technology” companies. So regarding e-commerce, they are powerful on the “e” side, but they are weak on the “trade” side when compared to physical retailers. On the other hand again in e-commerce, we see that physical retailers are weak in “e” part, but stronger than the Marketplaces in the commerce part. As such, we can consider the possible cooperation and merger possibilities of technology-oriented Marketplace platforms and trade-oriented physical retailers with a strong supply chain network in the future. 

The opinions of Tarik Ozturk, one of our Project Managers, are as follows:

Glovo, who decided to withdraw from Turkey in January 2020, missed an opportunity to make up for all the losses that had been accumulated in just a month or two. Considering this, we can add “patience” in the work that we believe to be right, even if not “obstinacy,” in addition to the above characteristics. How many of these habits will be preserved in the post- Covid period? Probably, as you mentioned in your article, most of them will be permanent. Although there is a return to traditional shopping, even in the “rematch” period, the share of online will never return to pre-Covid.

Even though companies offer online shopping services at the expense of loss in order to habituate the consumers, get a share from the market and grow, I believe that this will change during the settling of habits. Over time, consumers will find it reasonable to pay an additional price for the value of shopping they can do from their home, work or on the road without leaving the house, parking the car, walking to the store, or incurring extra costs. Likewise, companies will begin to charge for the extra services they offer. A reasonable service level was more acceptable at the cost of 2-3 times, rather than transporting at very low prices, at a loss, and with a low service level in the intense competition of cargo companies, as a few years ago . I believe that operational profitability, which is one of the question marks, will be achieved with a similar transformation in online commerce.

We can predict that many shopping malls will be empty in the near future if this benefit can be fully achieved online with augmented reality-like technologies in sectors such as clothing/shoes, which are among the categories where physical experience is most advantageous. For example, instead of renting a very large store, displaying all the models and retailing with high rent and stock, as Vestel is currently doing, we can think of selling in very small square meter spaces with the support of a sales representative on a digital giant screen. In the near future, we may not need as big shopping malls, stores and markets as before in retail.

Successful and necessary companies in the omnichannel shopping world seem to be:

  • Those who can offer their products and services that they provide physically on digital platforms with complete/added value,
  • Those who can understand, recognize and predict the behavior of the customer,
  • Marketplaces / super apps that have completed their transformation or formation (see ciceksepeti for a negative example )
  • Major supplementary support elements of e-commerce: delivery and payment systems providers. 

Peter Philips from pladis explained the situation from a very top down perspective:

It’s really interesting to think about the complex nature of omnichannel and multichannel in this time of significant upheaval. Despite all the details and changes we’ve come across, I think the fundamentals of FMCG still apply: Mental and physical accessibility! But these have been transformed in the new world. Mental accessibility was driven by TV advertising and the brand… Now by offering mental accessibility to our consumers through digital platforms, we need to continue by taking advantage of the opportunities created by influencers, other digital partnerships or social media. Physical accessibility, on the other hand, was all about distribution points, shelf location, and promotional displays… and now we must use e-commerce to create more opportunities to make our brands accessible to our consumers more often, and of course to win on the digital shelf. The growth of ‘last mile’ or ‘quick trade’ delivery providers like Getir is certainly interesting. I remember when I was in Turkey. I was hearing how people were calling (or WhatsApping) their local grocery store and having basic necessities delivered to their homes in no time. At the time we might have thought of this shopping as the ‘traditional channel’, but when we actually digitize it, we can have a view of where digital shopping is going for easy shopping products (noting the challenges like the cost of the last mile delivery, of course). It’s welcome and I’m glad to hear that E-Star is doing well.

Bizim Toptan CEO Huseyin Balci approaches the event as follows:

The Omnichannel-multichannel transition defines exactly the process we are in. Omnichannel requires a very serious system infrastructure. Hopefully Bizim Toptan, which is a multi-channel structure, will provide a good omnichannel experience to its customers after SAP.

Using the online and f2f channels as a hybrid and complementary is exactly where we want to go. One of our important strategic goals is to be a trading platform that has a fulfillment center in all provinces of Turkey and welcomes its customers digitally.

Eren Mantas, one of our Board Office Project Leaders, gave an interesting example: 

In my personal opinion, physical and online channels will continue to exist together, but the movements in these channels will increase in different expansions. It will continue to be less costly for some companies that already have the physical infrastructure to integrate digital in areas such as grocery than for online businesses to invest in fixed assets from scratch. However, as you mentioned, companies that offer different solutions, such as E-Star, will have increasing business opportunities in this multichannel, high and increasingly complex world.

Netflix, which started with DVD mailing in 1998, started streaming in 2007. It opened outside the US for the first time in 2010. It started shooting its own productions in 2012. Now, Netflix is ​​embarking on incorporating podcasts and mobile games into its existing subscription package at no additional cost to offset the slowdown in subscriber growth in major markets, particularly the US, and to retain existing subscribers. Netflix has been redefining itself over and over in a relatively short period of time. Today, success has become the only way to achieve it. For this, strong financial resources are necessary but not sufficient; it is necessary to cultivate and nurture a community of people and a culture that will think creatively, design and implement new experiments, and make it permanent.  

Our Kerevitas CEO Sukru Cin, on the other hand, gathered with his team and wrote almost a ‘LinkedIn’ article’s worth:

Our view is that the trends accelerated by the pandemic are more likely to be long-term permanent than the trends created by the pandemic. In addition to speed, comfort and convenience, e-commerce also creates emotional benefits. It can be said that in addition to functional benefits such as shopping without going out, contactless payment, user comments, value propositions that can be categorized as “emotional benefits” in terms of shopping, brand and consumption experience play an important role in the adoption rate of these channels. An example of brand experience can be a local manufacturer’s listing of their products on an e-commerce site, with the expressions of the employees who grow the product, or a live broadcast from the facility where the products are prepared. Informing consumers with personalized messages at different stages from the preparation of an order to its delivery can be an example of the shopping experience. Making video suggestions that can be watched while eating pizza in the confirmation e-mail of a given pizza order can be an example in terms of the consumption experience.

E-Commerce is a multi-segment sales channel, as stated in the article, there are many different structures within the e-commerce channel. In addition to operational models, it is useful to evaluate these different structures in terms of consumer motivation, consumer profile and category relations. When product, packaging, campaign and price policies are designed in line with e-commerce channel segmentation, they have the potential to provide a more efficient picture.

In the analysis titled “High growth, low profit: The e-commerce dilemma for CPG companies” published by McKinsey on March 22, 2021, 3 main factors affecting e-commerce profitability were highlighted. These factors are summarized as follows: 1. E-commerce marketing investments: as you mentioned in your article, “retail media” is one of the elements that must be managed most carefully. According to the McKinsey report, the share of this expense item in turnover varies between 7% and 9% on average, so performance management and ROI optimization become very important. 2. E-commerce turnover management (eRGM): Segmentation of e-commerce channels and determination of pricing and SKU policies in line with this segmentation play an important role on channel profitability. Any variation created needs to be based on the right foundations, as increased diversity in pricing policies, packaging, and SKUs also increases the complexity that needs to be managed. 3. Supply chain management: According to McKinsey analysis, the first and most fundamental step in supply chain management is data-based demand forecasting and planning. Therefore, the data collected from e-commerce channels and the correct analysis of this data become very important. However, as e-commerce channels mature, all processes from packaging to distribution need to be optimized in line with the needs arising in these channels.

It appears that e-commerce management requires knowledge in digital, sales, marketing, data science, and media planning. It is understood that the B2eB organization will basically be positioned as a solution partner that will demonstrate these competencies. In such solution partnerships, it is important to deal with integrated brand communication, action/reaction time, data/customer ownership, and brand memory.

Makine Takim and Gozde CEO, Levent Sipahi also offers a perspective from a different sector and an interesting take on B2B categories:  

The basis of our sales is to understand the demand of the user companies, to be a solution partner and to provide benefits in terms of unit cost. Therefore, our main customer group does not use their purchasing preferences in favor of the virtual environment. Although they do not buy, they want to have quick access to the product they want or use when designing their own production parts. The essence of the job is to evaluate customer requests, produce the product suitable for it and bring it together with the customer. I believe that all kinds of digital platforms should be used in order to ensure that all our B2B sales companies put customer requests and demands at the center and produce products in this direction, to ensure that they reach and see the product in the shortest way. On the other hand, our enterprises producing intermediate industrial goods should give importance to measurement and evaluation studies. Today, speed and durability are very important in all production stages. For example, the durability of a tap we produce should be equivalent to the speed and durability of the robot used in production in an automobile factory so that downtime is shortened. Or the film should be produced in accordance with 1000M/min speed in the printing house so that it can be compatible with the customer’s machines. All of these bring together the measurement and evaluation of customer requests and appropriate investments.

It is now inevitable for us to establish a structure that will put the customer at the center and enable them to reach us through every channel. We are trying to manage social media channels more actively and from a single spot. Together with CRM, we should measure customer demands with analysis and make sectoral awarenesses. At the moment, we are trying to do all digitalization steps within our budget and possibilities. 

Ahmet Senel, General Manager of our Horizon Sales Company, enriched the situation as follows: 

As you mentioned, the ‘one size fits all’ approach is no longer valid for customers; customers like to feel special. If I need to give an example; a friend of mine is a loyal customer of one of the marketplaces and has reviewed the iPhone 12 one or two times in the past months and tossed another one into her basket; During the discount period, they offered a special 500 TL discount in addition to the discount for everyone, and she completed her shopping! While this shopping made my friend happy, the WOM value was very high; because this friend of mine told about this situation to many of her friends. We are planning to include similar personalization and personalized marketing activities in PMaktif (Horizon B2B e-order platform) in our plans in the coming months.

Before the pandemic, all companies were trying to switch to the omnichannel structure and it was a priority for everyone. Currently, multichannel and omnichannel are separated from each other and are actually used as two different strategies. In companies like our company, which has a wide variety of brands and business lines, each brand can create strategies in a different channel structure. To give an example, we, as Horizon, can use the multichannel structure in our B2B sales organization and work on projects specific to the e-order system that will structurally change our efficiency, speed and go to market model while saving us money. E.g., Our research and studies continue in the coming period in order to realize two important issues such as placing orders online via PMaktif instead of sending sales representatives to customers with a low potential turnover in the traditional channel, and ensuring that orders are entered through PMaktif in non pladis categories, which do not have as widespread distribution as pladis categories. do.

Penta Sales and Marketing Deputy General Manager Fatih Erunsal, on the other hand, went out of his category and presented the situation clearly and gave stimulating ideas:

When comparing online and traditional chain stores, I think three important issues stand out:

First is Speed. To be “close” for immediate delivery of the desired product. Amazon made the purchase of “Wholefoods” to fill this gap. Even though many solutions such as Instacart, Glova, and Uber are offered for delivery, chain stores are still preferred, especially for fresh fruit and vegetable purchases. Despite being used many times, “Amazon fresh” did not achieve any success and was removed in many places. I think that solutions such as “Curbside pickup,” which have become widespread in America recently, support traditional retailing in terms of speed.

The second is Variety. One of the most important advantages of online is the unlimited variety of possibilities. Providing product diversity in central warehouses instead of positioning products in the store and doing this by marketplace companies in recent years is the most powerful feature of online. Again, in America, the store stocks of all the products you search online are displayed in detail almost everywhere, especially in spot product sales. (It used to be a feature, but its consistency and prevalence have increased). We can say that omnichannel applications in this area have increased.

The third is Cost. Perhaps one of the unforeseen issues in the first years of the emergence of online was high costs. Today, the costs of online platforms are higher than traditional chains due to issues such as delivery, returns, software infrastructure, ‘ fulfillment center ‘ investment, legal requirements.

In short, the implementation of Multichannel approaches becomes more essential since no platform can be successful in all three areas. Beyond that, brands/suppliers who know their customers very well show success in bringing this approach to Omnichannel. If I briefly touch on the comparison of Amazon vs. Walmart, when it comes to online, Amazon and chain stores are compared all over the world, but I think that now the comparison should be made as Amazon vs. traditional chain markets vs. other online sales platforms. Amazon has grown into a large and complex platform that sells hardware, content provider, technology platform, and media as well as online. Amazon has become a solution platform that can identify its customers very well and meet all their needs.    

I believe that in the next period, companies that reach the customer the fastest (Walmart, BIM, SOK, etc.), use the technology best (Ocado) or make the best use of customer information and offer appropriate solutions (Amazon) will be at the forefront. In this context, I think it is essential for companies from traditional chain stores to invest in technology, identify their customers and understand them in the best possible way. On the other hand, it was inevitable for online sellers to enrich their logistics solutions. Previously, customer service was the most important issue, and now the main issue has been to define the customer.

It is certain that our group has an incredible knowledge network in getting to know the customer. With this information, I think that national, regional or online strategy can be directed towards specific points. By using this information correctly, it is possible to cross/co-sell with different brands in some areas. This is an important bargaining power for us. For example, categories such as tea, books, etc.

Somehow speed will always be in the foreground, finding solutions to meet the logistics needs of our customers. The subject of easy delivery, such as the “Curbside pickup,” which has recently developed in the USA, has become a much demanded application. Home delivery is a solution, but the alternative of picking up from the location will improve the customer experience. I think that’s why gas stations have been an attractive selling point lately. Comparing with the USA in every field may not give very accurate results in such matters, due to the fact that the subjects such as physical space opportunities are different.  

Subscription is one of the most important issues of all companies. Everyone is trying to sell different things without losing when they catch the customer. It should be discussed that a group like ours, which has products in different fields and reaches customers through different channels, creates a common loyalty point for its customers.

Providing the opportunity to receive any product you buy online from a close point. This can be with the application or with the help of a code. It requires massive digital integration. In this way, the issue of subscription is resolved, promotions are made faster, and customers are offered the opportunity to purchase independent of a platform.

I know all my fellow executives closely and of course I know the projects they are working on. But the detailed information they gave about the changing consumer and channel structures and their approach to events motivated me a lot and carried along with it the encouraging information that you will receive very good news from us in the future. As I understand it, everyone feels the breath of changing consumer habits on the back of their necks and everyone is on fire, that’s very good! For where there is movement, there is abundance.

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